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I recently returned from a client trip to Asia, during which I visited Hong Kong for the first time. The ‘Fragrant Harbour’, to coin its literal name. From my short time there I found it to be a fascinating and vibrant melting pot of ‘East meets West’, with a can-do and pro-business attitude. Yes, the city has witnessed major politically motivated unrest and change in recent years, which has undoubtedly had knock-on effects, but as an outsider visiting for the first time, I could feel the city’s welcoming energy.

It’s that time of year again where Mariah Carey and Michael Bublé are defrosted for their annual appearances and Coca-Cola’s Christmas truck graces our cities. What a wonderful time of the year, and with growing belief that we have seen ‘peak rates,’ along with encouraging inflation data where should you look to spread Christmas cheer to your investment portfolio? These portfolio stocking fillers will hopefully bring you joy over the next few years.

Following the start of the US Federal Reserve’s belated rate hiking cycle in March 2020, this year has seen a marked pickup in interest rate volatility and a significant increase in the benchmark 10-year yield in recent months, which have contributed to broader economic uncertainty. So, what exactly has been driving this volatility and is this trend going to reverse anytime soon?

As we bid farewell to another Rugby World Cup, I am reminded how my own rugby playing days are barely visible in the rear-view mirror. As a ‘forward’ I would frequently hear shouts from the referee of “Use it or lose it” if we didn’t pass the ball out quick enough to the ‘backs’ once it had emerged from a scrum or ruck. Wasting the opportunity to use the ball, being penalised and conceding possession to the opposition is no way to win a match.

While the world’s attention has been focussed on the horrific events in Israel and Gaza, the storm brewing in bond markets reached a new intensity, with the yield on the US 10-year Treasury bond this week crossing a milestone of 5%, the highest since before the Global Financial Crisis (GFC). This matters a great deal to financial markets globally, its impact shouldn’t be underestimated. US Treasuries are the world’s greatest safe-haven asset, and the 10-year yield is the world’s discount rate. When it moves sharply, as now, it reverberates globally and immediately.

Our everyday lives involve countless decisions made under uncertainty. Incomplete, complex, and often conflicting information can steer our thinking away from crucial underlying factors that are likely to be more beneficial inputs into decision making. One such input are base rates, which can repeatedly be ignored when we perceive new information to be more relevant to our individual situation.

The term “irrational exuberance” was popularized by former Chairman of the US Federal Reserve, Alan Greenspan, when he referred to the ebullient behaviour of investors towards internet stocks in the mid-1990s. Such behaviour ultimately led to the ‘Dot-Com Bubble” and subsequent stock market crash in the early 2000s. Investors rarely seem to learn from past booms and busts, and we frequently observe evidence of irrational exuberance across all asset classes.

A few years ago, the world of sustainable investment exploded; I couldn’t open a newspaper without seeing an article referencing the importance of ESG (Environmental, Social and Governance) and every fund manager’s presentation suddenly included slides on how they consider ESG factors in their investment decisions.Roll forward to today and the narrative looks quite different…

Everyday decisions involve making balanced judgements between risks and rewards and we are essentially hardwired as humans to be natural risk management machines… Whether we’re making personal or investment choices, these always come with an element of risk. Therefore, it pays to thoroughly understand the risks involved in any venture, so that they can be managed and minimised.

In the world of investments, boutique investment houses often play second fiddle to larger asset gatherers. One of the key advantages of boutique firms is their ability to remain nimble, allowing them to respond swiftly to dynamic market conditions, potentially generating enhanced returns.